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TMI Blog2023 (3) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... s or both. Proviso with reference to the Section 98(2) of CGST Act, 2017 states that where the questions raised in the application is already pending or decided in any proceedings in the case of the applicant under any provision of this Act, the application may be rejected by the Advance Ruling Authority after providing an opportunity of being heard to the applicant. In the present case, the applicant has undertaken in form ARA-01 that the issue is neither pending nor decided in any proceedings under any of the provisions of the Act. Besides the applicable lees in the case stands paid. So, he is eligible to seek an Advance Ruling under the above provisions and the case is being heard on merits. Statement of facts as per ARA-01 1. M/s Dream Road Technologies Private Limited (hereinafter referred to as the "Applicant") is a Car leasing Company with the name "PumPumPum". The Applicant provides the private number (White Plate) of pre-owned cars on lease to the individuals. 2. The Applicant is engaged in providing pre-owned vehicles obtained from different modes of supply on operating leases to its customers. 3. The Applicant enters into different Motor Vehicle Lease Agreements ("M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utside the purview of GST i.e. non-Taxable Supplies. 3. Schedule II of the CGST Act lays down the transaction to be treated as a supply of goods or services. The relevant Extracts of the same are reproduced below:- "ACTIVITIES [OR TRANSACTIONS] TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES" 1. Transfer (a) any transfer of the title in goods is a supply of goods (b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof is a supply of services; (c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed is the supply of goods." Thereby under GST what is important to determine whether the supply is the "supply of goods" or "supply of services" is the "Transfer of title". In simple words, it could be said that any transfer of rights in goods without the transfer of title thereof is the supply of services or any transfer of title in goods under an agreement that stipulates that property in goods shall pass at future date is the "supply of goods". In light of the above, it can be said that the transaction of leasing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where defined in the said notification, thereby we fall back to Central Goods and Service Tax Rules, 2017. Relevant extracts of Explanation (b) to Rule-35 of Central Goods and Service fax Rules, 2017:- "supply of goods or services or both of like kind and quality" means any other supply of goods or services or both made under similar circumstances that, in respect of the characteristics, quality, quantity functional components, materials and the reputation of the goods or services or both first mentioned, is the same as, or closely or substantially resembles, that supply of goods or services or both". 6. From the above discussion words "like goods" shall mean, goods that are the same in respects, including physical characteristics, quality, and reputation as the goods being valued except for minor differences that do not affect the value of goods. Thus for a business like an applicant is into the business of leasing pre-owned cars, "like goods" shall be old and used cars. 7. Applicant's business model allows it to purchase only those cars that are available at a discount of 35% or more of the purchase value (i.e. Ex-Showroom price plus applicable taxes plus One Time Regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to in section 48, together with a declaration that he has not received any communication from such authority refusing to grant such certificate or requiring him to comply with any direction subject to which such certificate may be granted; (b) the transferee shall, within thirty days of the transfer, report the transfer to the registering authority within whose jurisdiction he has the residence or place of business where the vehicle is normally kept, as the case may be, and shall forward the certificate of registration to that registering authority together with the prescribed fee and a copy of the report received by him from the transferor in order that particulars of the transfer of ownership may be entered in the certificate of registration." 9. Further perusal of SBI guidelines indicates that it is charging different rates of interest on Car Loan funding in the case of old cars v/s new cars and the Interest rate for old cars is higher in comparison with the interest rate applicable to the new car. SBI auto rates chart w.e.f. 15-07-2022 is mentioned below for kind reference which also clearly differentiates between old cars and new cars. (Source: Relevant extracts from http ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary in the public interest so to do, on the recommendations of the Council, hereby exempts the central tax on intra-state supplies of goods, the description of which is specified in column (3) of the Table below, falling under the tariff item, sub-heading, heading or Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), as are given in corresponding entry in column (2), from so much tax as specified in Schedule IV of Notification No. 1/2017-Central Tax (Rale), as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table on the value that represents the margin of the supplier, on supply of such goods: - Explanation - For the purposes of this notification,- S.No. Chapter, Section or Heading or tariff item Description of Goods Rate (1) (2) (3) (4) 1. 8703 Old and used, petrol Liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven motor vehicles of engine capacity of 1200 cc or more and of length of 4000 mm or more. Explanation. - For the purposes of this entry, the specification of the motor vehicle shall be determined as per the Motor Vehicles Act, 1988 (59 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding upon the dimensions of the car. 14. Further, for the reasons recorded above compensation cess on leasing of old and used cars shall be levied by virtue of notification no. 01/2017- Compensation cess (Rale) dated 28th June 2017. The relevant extract of the same reproduce below for reference: - "S.No. Chapter/Heading/ Sub-heading/ Tariff Item Description of Goods Rate of goods and services tax compensation cess (1) (2) (3) (4) 42A. 87 All old and used motor vehicles Explanation: Nothing contained in this entry shall apply if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT credit as defined in CENVAT Credit Rules, 2004, or the input lax credit of Value Added Tax or any other taxes paid on such vehicles. NIL" 15. On the said transaction of leasing of old and used cars, the applicant has not availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT credit as defined in CENVAT Credit Rules, 2004, or the input tax credit of Value Added Tax or any other taxes paid on such vehicles. Thereby no Compensation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fordable rates. Customers share their requirements or can select a car from a pool of certified pre-owned cars. The Applicant delivers good quality assured car to the user based on the set of terms of the agreement. The customer has the option to choose the lease period which varies from 6 to 24 months to best that suit their needs. At the end of the lease term, the customer will hand over the vehicle to the Applicant. When the pre-owned vehicle becomes obsolete, the Applicant removes the said vehicle from its fleet and discharges the necessary tax liability on the sale of the old motor vehicle as per the Notification 08/2018 Central Tax (Rate) dated 25th January 2018 in case the sale proceeding exceeds the written down value as determined in the said notification. Comments of Proper Officer dated 15.12.2022:- "I had discussion with representative of the tax payer on dated 06.12.2022 whereby it has been observed from the GSTR 2A for the month of June 2022 that the taxpayer is availing input tax credit on purchase of vehicles as detailed below:- June 2022 Amount IGST Cess (1) Shekhawati Electronics Pvt. Ltd 07AAACS3634FIZM Invoice No. 32/26-06-2022 2448883/- 685687 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailment of the input tax credit by the applicant is subject to the conditions prescribed under section 17(5) of the CGST Act, 2017 read with the relevant rules. In the light of the proper officer's comments on the issue at hand mentioned here in above, it can be said that the applicant has not submitted a clear picture on the issue of availment of ITC before the authority. The supply of leasing of the pre-owned vehicles is not covered under the notification no. 8/2018 -Central Tax (Rate) dated 25th January 2018 as this is related to the sale of old and used vehicles. This notification needs to be read with rule 35 of the CGST Rules, 2017. It shall not apply in the case of motor vehicles given on lease. In the case of transfer of right to use any goods i.e. leasing, the applicable rate of tax is same as of new vehicles under the GST Act and compensation cess also as on supply of similar goods. The authority is of opinion that the supply of leasing of pre-owned vehicles cannot be treated as leasing or renting of goods like computers, furnitures, refrigerators or air conditioners etc. And the tax rates of new vehicles are to be applicable in the present mailer as per the specific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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